Housing commission recommends $850,000 loan for Chestnut Apartments rehab

The Carlsbad Housing Commission voted May 14 to recommend city council approval of a Housing Trust Fund loan of up to $850,000 to Kingdom Development to acquire and rehabilitate Chestnut Apartments at 945 Chestnut Avenue.

Mandy Mills, Director of Housing and Homeless Services, described Chestnut Apartments as a 16-unit property with one- and two-bedroom units serving households at roughly 30–80% of area median income that was built in the mid-1970s and is in poor to fair condition. Mills said the city previously provided a $3.1 million loan to Solutions for Change in 2014 to acquire the property; Solutions for Change was unable to complete rehabilitation and the property entered into a default situation. The city acquired the property in a transaction approved by council in 2024 and later entered a management agreement with Kingdom Development.

"Kingdom Development is ready to pursue the acquisition and rehabilitation, and secure additional financing necessary to do the work," Mills said. Nicole Piano Jones, senior program manager, described Kingdom as a California nonprofit experienced with tax credit financing and said staff estimated total development costs "to be around $11,000,000." Jones said the proposed city loan would function as residual-receipts gap financing and that the final loan amount would be determined at the end of development when actual costs and other financing are known.

Staff recounted that in 2025 the council authorized a management agreement with Kingdom and a separate forgivable $450,000 loan from the Community Development Block Grant program for urgent repairs. Staff also said the request was evaluated for consistency with City Policy 90 and the housing element and that the housing policy team recommended the commission forward a recommendation to council in June; the developer would then apply for tax credits and bond allocations in July if the commission’s recommendation is approved.

Commissioners asked about the history and timing of the default and whether other developers had expressed interest. Staff said the original loan was dated December 2014, COVID-era extensions followed, and by about 2021 Solutions for Change began serious conversations with the city about its inability to move forward; the organization decided to step back from government-financed properties and the city issued a 2024 request for proposals that produced no viable proposals. Staff said Kingdom has been managing the site and that the combination of tax credits, permanent financing and the requested up-to-$850,000 loan would support temporary resident relocation during rehabilitation and completion of the project.

A motion to adopt the staff resolution recommending city council approval of the Housing Trust Fund loan carried with four yeas and one absence. Staff said they anticipate city council review in June, tax credit and bond applications in July, and potential loan closing and construction start in early 2027 if financing is secured.

The commission closed the item with no public comments.